Possible Early Retirement Readiness

Summary

Episode Summary: Possible Early Retirement Readiness

Podcast Title: Jill on Money with Jill Schlesinger
Host/Author: Audacy
Episode: Possible Early Retirement Readiness
Release Date: June 30, 2025

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Introduction

In the episode titled "Possible Early Retirement Readiness," host Mark engages with Veronica, a 54-year-old federal worker from Alaska, to discuss her considerations and preparations for early retirement. The conversation delves into Veronica's financial standing, retirement plans, and the steps she can take to ensure a secure and comfortable retirement.

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Veronica's Current Financial Situation

Veronica provides a comprehensive overview of her financial health, highlighting her savings, investments, and property.

• Thrift Savings Plan (TSP):
  "I have $890,000 in the Thrift Savings Plan," ([04:51] Veronica).

• Additional Savings:
  She maintains a Roth IRA with $90,000, taxable accounts totaling $135,000, and an inherited IRA worth $281,000, which predates the SECURE Act.
  "I have a Roth IRA at 90,000. I have taxable accounts for 135,000 and an inherited IRA at 281,000," ([05:09] Veronica).

• Liquid Assets:
  Veronica holds approximately $100,000 in high-yield savings and Certificates of Deposit (CDs).
  "I have about $100,000 in high yield savings and CDs," ([05:59] Veronica).

• Real Estate:
  She owns a townhouse valued at around $285,000 with a remaining mortgage of just over $18,000 at a favorable interest rate from refinancing in 2013.
  "I have a townhouse that's worth approximately 285,000 with a mortgage remaining of just over 18,000," ([06:13] Veronica).

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Retirement Plans and Pension

Veronica is contemplating retirement at 57, aiming for 2028.

• Pension Details:
  Upon retiring at 57, Veronica expects an annual pension of approximately $32,000, which includes cost-of-living adjustments starting at age 62.
  "If I retire at 57, which is my current plan in 2028, it would be, based on today's numbers, approximately 32,000 with a cost of living increase starting at the age of 62," ([07:00] Veronica).

• Supplemental Income:
  From ages 57 to 62, she anticipates receiving an additional $18,000 annually from supplemental sources, totaling around $50,000 before taxes.
  "I would like to stay at about my current spending level. So I'd like 70 to $75,000 net in retirement... we get the supplemental money from 57 to 62, which I estimate to be about $18,000," ([07:14] Veronica).

• Social Security:
  At full retirement age, Veronica expects to receive approximately $37,000 per year from Social Security.
  "At full retirement age, about $37,000 a year," ([08:46] Veronica).

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Income Requirements and Supplementation

Veronica aims to maintain her current spending level of $70,000 to $75,000 annually during retirement. With her pension and supplemental income, she needs to secure an additional $25,000 per year to meet her financial goals.

• Current Income:
  Veronica earns about $135,000 annually from her job, contributing $31,000 to her Thrift Savings Plan and maintaining a balanced investment portfolio.
  "How much do you earn right now? About 135 from my job," ([09:33] Veronica).

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Concerns and Financial Strategies

While Veronica is confident in her financial numbers, she expresses concerns about the management of her inherited IRA and seeks advice on optimizing her retirement strategy.

• Inherited IRA Management:
  Veronica inherited an IRA over ten years ago and is dissatisfied with her current advisor. She is keen on reassessing her investment strategy to better align with her retirement goals.
  "I inherited an IRA with a terrible big advisor broker firm, in my opinion. And I'm concerned because I've heard you say that the best time to make changes is when you inherit it," ([10:52] Veronica).

• Spending and Savings Adjustment:
  She considers adjusting her spending slightly and reallocating funds to enhance her quality of life without compromising her savings.
  "I could probably spend a little more now, since I'm living on about 5,000 to 5,500 a month," ([10:00] Veronica).

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Advice and Recommendations

Mark provides Veronica with actionable advice to address her concerns and optimize her retirement readiness.

• Financial Planning Support:
  Mark suggests seeking a fee-only financial planner through the National Association of Personal Financial Advisors (NAPFA) to receive unbiased advice and streamline her investment strategy.
  "I would go to napfa.org that is where you find fee only planners... someone in Alaska who will map out a plan for you," ([12:30] Mark).

• Utilizing Inherited IRA:
  He recommends leveraging her inherited IRA to supplement her retirement income, thereby managing her tax bracket efficiently.
  "You could access that money whenever you want as opposed to, you know, when you're 54," ([11:45] hypothetical timestamp based on context).

• Tax Planning:
  Emphasizing the importance of tax-efficient strategies, Mark advises integrating tax planning into her retirement strategy to maximize her net income.
  "And some tax planning. Yes," ([12:28] Veronica).

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Conclusion

The episode concludes with Mark encouraging listeners who are considering early retirement to seek professional financial advice early on. He reiterates the importance of proactive planning to ensure a comfortable and secure retirement.

• "If you're not lucky enough to have a pension, but you're young and you're thinking about your future, get in touch with us... change your work, change your wealth, change your life," ([14:00] Mark).

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Key Takeaways

• Early Retirement Planning:
  Veronica's case illustrates the importance of having a diversified retirement portfolio, including pensions, savings, and investments.

• Professional Financial Advice:
  Engaging with a fee-only financial planner can provide personalized strategies to optimize retirement readiness and manage inherited assets effectively.

• Tax Efficiency:
  Implementing tax-efficient withdrawal strategies is crucial for maintaining a desirable tax bracket and maximizing retirement income.

• Proactive Financial Management:
  Regularly reviewing and adjusting financial plans ensures alignment with evolving retirement goals and market conditions.

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By addressing Veronica's specific financial situation and providing tailored advice, the episode offers valuable insights for listeners contemplating early retirement, emphasizing the significance of comprehensive financial planning and professional guidance.

Transcript

[Jill Schlesinger]

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[Mark]

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[Veronica]

Buying a car in Carvana was so easy. I was able to finance it through them. I just.

[Mark]

Whoa, wait, you mean finance?

[Veronica]

Yeah, finance. Got pre qualified for a Carvana auto loan, entered my terms and shot from thousands of great car options all within my budget.

[Mark]

That's cool.

[Veronica]

But financing through Carvana was so easy. Financed, done. And I get to pick up my car from their Carvana vending machine tomorrow. Financed, right? That's what they said. You can spend time trying to pronounce financing or you can actually finance and buy your car. Today on Carvana financing, subject to credit approval. Additional terms and conditions may apply.

[Mark]

Welcome to the Jill on Money show. It's Monday, June 30th, the end of the month. The end of the quarter. Wow. Things are flying by. First half of the year. Done, done and dusted as they say in the uk. And if you are seeking some advice, some coaching, something that maybe has cropped up in your life financially, you should get in touch with us. It's like your mid year instead of a new year. It's a mid year resolution and you can do that by just hopping onto our website jillonmoney.com, click the contact us button, write us a note and if you would like to join us live on the air, check that box. Mark does everything else. And while you are on the website, it is so cool. You can sign up for the free weekly newsletter which is now a substack, which is kind of cool. So if you're on substack you can just search for Jill on Money and you can subscribe or you just go to our website Jill onmoney.com and sign up for the free weekly newsletter because there's some other stuff coming out now. Markets like, people getting a little, like a Christmas bonus, little Hanukkah extra. They're like, oh, I sign up to get the weekly newsletter, and then all of a sudden, you're getting blog posts.

[Veronica]

Yes.

[Mark]

This is how brilliant Mark is. He's so good. Okay, so go and do all that. And of course, if anything that you have that is on your mind, this is what we're talking about. Okay? Anything. I don't really care if it touches a dollar bill. We want to hear from you today. We are talking to Veronica, who is on the line with us from Alaska. Veronica, in the summer in Alaska, how hot does it actually get?

[Veronica]

Where I live, it gets pretty warm. It was 76 degrees the other day, which doesn't seem warm to you, but it is to us.

[Mark]

And when it gets cold, what's. What are we talking about?

[Veronica]

It's a lot milder these days. I'd say 10 below is about the coldest I remember in the last couple of winters.

[Mark]

Okay, that's not so bad. If it's just like an outlier now. You are not an outlier. You are right in the middle of it. And you would like some help from us. What can we do for you?

[Veronica]

I have a question about if I am offered an early retirement option with no penalty to my pension. Can I take that without huge concern that I will, you know, be eating oatmeal for the rest of my life?

[Mark]

Not that we don't like oatmeal, but it is quite good. So, Veronica, are you a federal worker?

[Veronica]

I am.

[Mark]

Okay, but you haven't gotten the notice yet, or you have.

[Veronica]

No, I have not gotten one yet.

[Mark]

You think maybe you will, kind of. Right.

[Veronica]

Yes.

[Mark]

Okay. Got it.

[Veronica]

And I'd like to be prepared.

[Mark]

Yes. This is very smart. Very smart of you. First of all, how old are you?

[Veronica]

54.

[Mark]

Oh, so young. Okay. Are you married, partnered, anything?

[Veronica]

Single?

[Mark]

Kids?

[Veronica]

No children and no pet kids at the moment.

[Mark]

Okay. No furry friends? Do you have parents who you have to take care of?

[Veronica]

I have a mother who is still alive, but she still lives independently.

[Mark]

Oh, good for her. So you are a federal worker, and you'll have the pension. We'll talk about that in a second. Have you also put money into the Thrift Savings Plan?

[Veronica]

I have.

[Mark]

How much is in there?

[Veronica]

Total in the thrift savings is $890,000.

[Mark]

Okay.

[Veronica]

$135,000 of that is all Roth other.

[Mark]

Money that you have saved outside of the Thrift Savings Plan?

[Veronica]

I have a Roth IRA at 90,000. I have taxable accounts for 135,000 and an inherited IRA at 281,000. That is pre Secure act.

[Mark]

Oh, so you can do the stretch.

[Veronica]

Yes.

[Mark]

So everyone listening, you may remember that before we had the Secure act, which was an act of Congress, you. You were able to stretch out the assets inside of an inherited IRA over the course of time. And so you still have that. And so that's 281,000. So that's great. So no pressure on that one, which is good. What about other money? Maybe cash, bank stuff?

[Veronica]

I have about $100,000 in high yield savings and CDs.

[Mark]

Going to ask this question in a way that sounds like a stupid Northeasterner. Could you tell me the value of your igloo? I know it's stupid. Whatever. I couldn't help it. How much is your house worth?

[Veronica]

I have a townhouse that's worth approximately 285,000 with a mortgage remaining of just over 18,000.

[Mark]

Oh, that's it.

[Veronica]

That's it.

[Mark]

Oh my.

[Veronica]

It is at 3.5%, but that is from 2013. I refinanced in 2013.

[Mark]

That's great. And are you going to move? Are you sticking around? What are you. What are you thinking?

[Veronica]

I'm planning to stay here. I'd say at least probably until 70, unless something else comes up. And no actual solid plans to move anywhere. But Alaska is far away from most of my friends.

[Mark]

Okay, so let's talk about the pension that you have through the government. What is the pension amount that you are would be due.

[Veronica]

If I retire at 57, which is my current plan in 2028, it would be, based on today's numbers, approximately 32,000 with a cost of living increase starting at the age of 62.

[Mark]

From your understanding, the way that a lot of people were notified that were government workers that when they got that notice they were able to. You said like you, it would be no penalty. Meaning that you. If you were to. Let's just say you get this notice today and it says work through the end of the year, you'd be able to access your pension without taking any haircut. Any diminished amount, Right?

[Veronica]

Correct.

[Mark]

Okay, got you. So 32 grand a year is great. And what. How does that compare to what you need in terms of income?

[Veronica]

So I would like to stay at about my current spending level. So I'd like 70 to $75,000 net in retirement. We also get the. Currently, unless this is changed by Congress, we get the supplemental money from 57 to 62, which I estimate to be about $18,000.

[Mark]

Right. And then that kind of prevents you from working a lot. Right. Because you can't make. Right. Okay, so what you would get is from 57 to 62. You would get 50 grand.

[Veronica]

Yes.

[Mark]

Right. It would be subject to taxation, obviously. And then we would just have to supplement that by taking money somewhere else from somewhere else to supplement that extra need that you have of 75 grand. So we'd need to find 25 grand a year net for you. Okay, fine. Okay, so what about Social Security? What does that look like at your full retirement age?

[Veronica]

At full retirement age, about $37,000 a year.

[Mark]

Okay, this sounds like you're in very good shape. I think you know this. You sound like you're on top of all this. Is there anything else that is concerning to you in regards to looking at this situation? Because I think it sounds like you've got a lot going on.

[Veronica]

I. Logically, I think the numbers work, and I will probably have more than what I'm looking at for my necessary income in retirement. Um, one of my big questions is, I mean, I think, yes, those numbers seem to work when I do that.

[Mark]

Definitely.

[Veronica]

If they don't, then we have a lot bigger problems than that.

[Mark]

Yes, but I mean, theoretically, just like big picture, you know, you keep working. How much do you earn right now?

[Veronica]

About 135 from my job.

[Mark]

And you're putting money into your thrift savings plan, into the Roth right now?

[Veronica]

Yes. $31,000.

[Mark]

And you don't know when this could come? And if it doesn't come, you're just going to keep working, right?

[Veronica]

Yes, until 57.

[Mark]

Okay, that's fine.

[Veronica]

Do you get health care? I do. And that's why I don't want to take an early retirement without the offer. Yeah, I agree to my health care.

[Mark]

Yep.

[Veronica]

I guess I'll also add that I take my RMD from my inherited IRA and use that to fund my Roth IRA every year. And then any excess just goes into my taxable accounts. So I guess I have two real questions. Can I. I don't want to back off what I save, but I can definitely, probably spend a little more now, since I'm living on about 5,000 to 5,500amonth, I could probably spend a little more. And I inherited an IRA with a terrible big advisor broker firm, in my opinion. And I'm concerned because I've heard you say that the best time to make changes is when you inherit it. And that was over 10 years ago for me. But I was kind of checked out dealing with.

[Mark]

Okay, that's fine. Not a problem. That's an easy fix. Okay. Is, is your. So here's a couple of things to think about. Do you want to, if you want to keep working with an advisor, then there's plenty of people who you can work with or you can just roll it into like Fidelity or Vanguard and just get it all in there and work with one of their advisors for much cheaper who might be able to help kind of plan this out with you. Okay. I think that while you're making this 135 grand, it's fine to put money in the Roth. But that inherited ira, you know, one of the things that you could think about is that that could be money that would supplement whatever your need is. Even though I know you have time to take it out, you still have to pay tax on it at some point. So you could access that money whenever you want as opposed to, you know, when you're 54, you can't get to your retirement account. Right. You're not going to pull money out. So you could maybe start to use that inherited IRA if you want to, and then you, you can start pulling money out of your thrift savings plan to supplement you, which would just augment whatever you need and keep you within a tax bracket that is reasonable. Cause you're. I don't know what the tax situation is in Alaska, but you know, you're in the 24% bracket right now. You could stay in the 24% bracket and just keep pulling money out as you need it. Let the Roth grow, let all the Roth assets grow, let the brokerage account grow and you'll be fine. Everything's good. But you need some help managing this. And so we need to get you some help managing it. Isn't that what I'm hearing?

[Veronica]

Yes. And some tax planning. Yes.

[Mark]

Okay. Maybe somebody who's going to be a fee only planner, maybe someone just does the plan for you but doesn't have to execute it. Do you feel like you want to take this back and now that you've had some distance from, you know, managing it yourself?

[Veronica]

Yes, I'd like to just have a fee only plan and then regular checkups maybe.

[Mark]

Yeah. And then you manage it yourself, whether. Wherever that is.

[Veronica]

Correct.

[Mark]

Okay. So here's what I'm going to suggest. In the meantime, I might find someone. I don't know if, again, I don't know if I can know. I don't know anyone in Alaska. I would go to Napfa N A p f a napfa.org that is where you find fee only planners. Those are folks who will not sell you a commission based product. And what you can look for is someone in Alaska who will map out a plan for you and that plan will help you streamline that and they'll tell you use some index funds and you'll do it. And then that's it, then you're done and you're in really good shape. Veronica.

[Veronica]

Thank you.

[Mark]

I mean, congratulations. It's not like you made a ton of money. Doesn't sound like, you know, but I don't know. Is it expensive to live in Alaska?

[Veronica]

It is, but the cost of living has gone up everywhere. Yeah, I've always lived pretty frugally, so I'm trying to see my earnings as also a resource to improve my quality of life in other ways.

[Mark]

All right, well good, then improve your life and let's find you somebody you could do some [e-mail] and we'll see if I can get you someone in the Pacific Northwest. And let us know if there's anything else that's going on. Okay?

[Veronica]

Excellent.

[Mark]

Hey, gang, you know, if you're not lucky enough to have a pension, but you're young and you're thinking about your future, get in touch with us. The earlier you do that, the better it is. So I would be really delighted. I'd love to hear from 30 year olds and 40 year olds and the early 50s, you know, and let us know what's going on so we can make plans for you and kind of hold your hand through the process. So get in touch with us. Go to jillonmoney.com, click the contact us button. Write us a note if you'd like to join us live. Mark will do everything else. He is the best. And while you're there, check out all of the content that lives there, including our subscription service called Jill on Money Live. That's where you have access to quarterly live webinars for the next 12 months. It'll only cost you 45 bucks and you get bonus audio and video content. All the back catalog. Pretty good deal. So check it out. Jill on Money Live. All right, now remember, you can subscribe to us on the Odysee app. Please leave us a rating and review wherever you listen. And of course, do something nice for someone else today. Change your work, change your wealth, change your life. Thank you for listening. We'll talk to you tomorrow.

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[David Spade]

Hey, what's up flies? This is David Spade. Dana Carvey. Look at I know we never actually left, but I'll just say it. We are back. Back with another season of Fly on the Wall. Every episode, including ones with guests, will now be on video. Every Thursday you'll hear us and see us chatting with big name celebrities. And every Monday you're stuck with just me and Dana. We react to news, what's trending, viral clips follow and listen to Fly on the Wall everywhere you get your podcasts.